In the past decade, there was a sharp increase in medical liability premiums, but recently, malpractice insurance has started to level off, indicating a potential new trend.
As a decade that has seen sharp increases in medical liability premiums heads toward its final year, the tab for malpractice insurance has leveled off, and some primary care physicians-ob/gyns, in particular-have seen premiums drop. Of course, ob/gyns aren't getting off cheap: According to Medical Economics' 2009 Exclusive Survey, which focused on physicians' 2008 earnings and expenses, ob/gyns paid a median $45,000 in liability premiums in 2008. That's $10,000 less than the median $55,000 they paid in 2007 but still much higher than the $12,500 paid by pediatricians, internists, family practitioners, and general practitioners.
The rate drop is a result of a sharp decrease in claims frequency during the past couple of years, says Lawrence E. Smarr, president of the Physician Insurers Association of America (PIAA), a trade organization representing professional liability insurance companies owned or operated by physicians and other healthcare providers. The other premiums driver is severity-that is, the dollar amount of judgments-which has been trending upward during the past few years.
"It could also be due to plaintiffs' attorneys finally getting fed up with losing too many cases," says Smarr, who notes that, according to PIAA figures, only five percent of medical malpractice claims filed in the United States go to trial, and 80 percent of those trials yield verdicts favorable to the defense.
As does Smarr, O'Neil maintains that no one dynamic has led to rate moderation. "Tort reform is a factor," he notes, "but losses are down in states that haven't enacted tort reform. And although patient safety initiatives are on the upswing, as medicine has become more bureaucratized and harder to navigate, patient frustration and unexpected outcomes still send patients to attorneys. But it's also possible that these attorneys are becoming more selective, and that [selectivity] limits the frequency of lawsuits."